Door not closed on Tshipi sale

Pallinghurst Resources, the investment company run by former BHP Billiton chief executive
Brian Gilbertson
, is open to revisiting a deal with
OM Holdings
on the world-class Tshipi manganese project in South Africa.

But it will be up to OM, which mines manganese in the Northern Territory and whose largest shareholder is Ukrainian billionaire ­Gennadiy Bogolyubov, to devise a suitable proposal.

London-based Pallinghurst and co-investors including Korean steel maker Posco and investment bank Investec had been poised to sell a 49.9 per cent stake in Tshipi to OM last year in exchange for $245 million worth of shares but the deal fell over at the last minute. Pallinghurst and the co-investors subsequently tipped the stake into another Australian-listed company,
Jupiter Mines
.

On a recent trip to Australia, ­Pallinghurst partner and Jupiter director
Priyank Thapliyal
told The Australian Financial Review that a new deal with OM, which owns 13 per cent of Tshipi and 50.1 per cent of the marketing rights, could not be ruled out.

“OM has openly said they want more of it and I think the only way for them to do that is for them to now think of something with Jupiter," he said.

“If they come back to us with a sensible proposal, we will look at it because we are all directors of a listed company and that’s what our responsibility is."

The sale of the Tshipi stake to Jupiter was finalised two weeks ago, with the issue of 23.7 million new Jupiter shares to Pallinghurst, POSCO and Investec.

Following the issue of another 1.2 billion new shares shortly after, Pallinghurst and its co-investors, which also include AMCI Capital and the Energy & Minerals Group, now control 85 per cent of Jupiter.

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Mr Thapliyal said he and Mr Gilbertson continued to assess other assets that might fit Jupiter’s “steel feed" strategy, which is focused on manganese, iron ore and coking coal.

But he made it clear that the priorities for the Jupiter management team were to bring Tshipi into production and advance the company’s Mount Ida magnetite iron ore project in Western Australia’s Yilgarn region. “If no transactions happen, I don’t get any coking coal ever for Jupiter, but [if] these two projects are delivered, I think the shareholders will be smiling," he said.

Jupiter is finalising a feasibility study on Tshipi and expects to make a decision to proceed with the project in the next few months.

Tshipi will cost an estimated $US200 million to develop, of which Jupiter will need to fund half.

Gauging by the response from ­people he spoke to on his Australian roadshow and the calibre of the co­investors, Mr Thapliyal didn’t expect this to be difficult.

“You could probably say it is banked already," he said.

Mt Ida is not as advanced, but had been described by former Jupiter chairman and iron ore industry ­veteran Geoff Wedlock as the best magnetite project he’d ever come across. Mr Wedlock died in the ­Sundance Resources plane crash in June.

In the next few months, Jupiter will complete an initial drilling program on Mt Ida and hopes to announce a maiden 400 million-tonne resource. That will provide the basis for the company to start talks with US iron ore miner Cleveland Cliffs about using its Yilgarn infrastructure.

“That is how the Yilgarn strategy came about because that is the area where we could have a meaningful production in a brownfield expansion model," Mr Thapliyal said. “That is the big attraction for Brian and me. We don’t have the organisation, the skills set, to build a greenfield project."

Mr Thapliyal said Mt Ida would require about $1 billion in capital and produce 10 to 15 million tonnes of iron ore concentrate a year.